AI demand continues to be high: easing in the crude oil market is pushing Wall Street to record levels

The G7 countries are intervening in the oil market, calming the nerves of investors. The S&P 500 and Nasdaq promptly climbed to highs. However, the growing US trade deficit could reignite inflationary pressures.

US stock markets closed higher on Tuesday thanks to calming oil prices and falling bond yields. The broad S&P 500 index and the technology-heavy Nasdaq reached new record highs. The S&P 500 advanced by 0.6 percent to 7,818 points. The Nasdaq technology exchange index gained 0.4 percent to 27,599 points. The Dow Jones index of standard stocks rose by 0.5 percent to 51,521 points.

Investors were relieved about the stabilization in the oil market. The G7 countries had previously agreed to release emergency reserves of diesel and crude oil to ease supply concerns triggered by the Iran war. As oil prices stabilize or fall, fears of energy-driven inflation decrease, said Oliver Pursche, manager at asset manager Wealthspire Advisors. This depresses government bond yields and in turn drives up stock prices. According to the CME stock exchange's FedWatch tool, the financial markets are currently expecting a decreasing probability that the US Federal Reserve will raise interest rates for the second time in a row at its upcoming meeting this month. "We don't expect the Fed to do anything at the next meeting," said Tim Ghriskey, a strategist at Ingalls & Snyder. However, he assumes that the central bank is in a gradual cycle of interest rate increases.

Imports of capital goods rose by 4.4 percent in August. Overall, the U.S. trade deficit grew 13.7 percent as imports hit a record high, according to the Commerce Department. Strong domestic demand could further fuel inflationary pressures. Investors are now turning their attention to the third quarter reporting season, which begins next week. According to LSEG data, analysts expect earnings growth of 30.6 percent for companies in the S&P 500. This is likely to be driven by an expected jump in profits in the energy sector of 114.7 percent and an increase of 66.5 percent among technology companies.